WSJ: Apple in Talks with Cable Providers to Provide a “Set-Top Box”

According to The Wall Street Journal (a reliable source when it comes to Apple rumors and news), Apple is in talks with various cable operators regarding a set-top box, which would allow for live television to be streamed through an Apple-designed interface, but also plug in to the cloud and offer online services and media. The WSJ does note that no deal has yet been struck, but they also include that Apple is driving a hard bargain: Apple wants a 30% cut on “certain transactions”, and an exclusive on a type of IP technology. The “people familiar with the matter” do not specify what exactly that means. It could be that Apple will provide its own set of media that is accessible through the Apple TV (think iTunes Movies), along with programs like Netflix and Hulu (which will likely survive, as long as they are willing to pay Apple). It could also mean that the device wouldn’t accept traditional IR input, but would instead substitute it out for a wireless form of control – think controlling the box with an Apple remote, or an iPad or iPhone via an app over WiFi (or, potentially, Bluetooth 4).

This set-top box represents a different approach from previous Apple TV rumors, where an entire TV set was considered to be the most logical way for Apple to tackle the television market. According to The WSJ, this could still be in the cards: there are still active prototypes under development in Apple’s campus, if the “people familiar with the matter” are to be believed.

This approach is more akin to the Google TV way, though Google’s products have been hampered by poor support, buggy and slow hardware, and the cable operators not actively adopting them. While Dish does allow Google TV boxes to show its list of live channels, no other company of note does. There are hacks to get it working reliably, but they are difficult and cumbersome to the average user. Apple, obviously, wouldn’t settle for this, so it makes sense that they are walking straight in to the lion’s den and making deals with the operators.

Apple has a history of going with this approach: partner with the institutionalized occupier of a market, and then slowly but surely turn them in to a “dumb pipe.” This happened with the music labels, who reigned supreme before iTunes took off due to its ease-of-use and low prices. The same can be seen going on with carriers, as Apple brings services and functionality that were once thought of as belonging to the carrier under its umbrella. The latest example of this is iMessage, which takes even SMS away from the dirty hands of the carriers, and goes even further in iOS 6.

Disruption of an industry takes time, and comes in many different forms: this seems to be Apple’s preferred approach. But as usual, while this makes sense from a business perspective and in terms of what Apple has historically done, this is a rumor. Treat it as such.

[The WSJ via The Verge]

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